Chapter 7 Overview
Chapter 7 is the most common type of bankruptcy, it is sometimes referred to as "liquidation bankruptcy," or "straight bankruptcy." The basic purpose of chapter 7 is to provide you with a fresh start by wiping out all qualifying debts including credit cards, medical bills, repossession deficiencies, law suits as well as a variety of other debts. Bankruptcy lawyers can help with the process. In chapter 7 there is no repayment required for most unsecured debts, your debts are wiped out completely and permanently. In about 99% of chapter 7 cases, the consumer keeps all property, and eliminates most debts. The entire process usually takes less than 4 months to complete. After the bankruptcy is over, the consumer may choose to selectively pay back debts, such as debts to family members, however repayment is not legally required.

If you need help with the different types of bankruptcy, please contact a Bankruptcy Lawyer today!

The Chapter 7 Process
In chapter 7 the typical consumer only has one meeting with the bankruptcy trustee. The purpose of the meeting is to give creditors a chance to ask questions, although it is very rare that a creditor shows up; it is mostly handled by attorneys. The trustee may also ask you questions about particular items on your petition usually focusing on assets or income. Most meetings take only a few minutes. Some consumers feel some level of anxiety or fear leading up to the meeting with the bankruptcy trustee, but there is no reason to fear the trustee. The trustee is looking for people who are hiding assets or trying to defraud the system, they don't want to harass or scare the common consumer. The meeting will take place in an ordinary conference room, and the trustee is not a judge; the setting is informal. After the meeting, the first thing most people say is "...that's it?...that was easy." Once the meeting with the trustee is done, the only thing left to do is keep your address current with the court, and wait for your discharge to come in the mail.

Chapter 13 Overview
Chapter 13 provides consumers with a way to consolidate debt under federal law and repay creditors a portion of what is owed over time. The idea behind chapter 13 is that the consumer makes sufficient income to pay all current living expenses (rent, food, car, utilities, etc.), but not enough to pay off all debts in full or comply with creditor's demands. In chapter 13, living expenses are paid first, then whatever is left over goes into the consolidation plan. The plan is not based on what you owe (in most cases), it is based on your ability to repay creditors. The calculation of your plan payments involves many variables, but most importantly it is based on your income and expenses. Whatever is left at the end of the month goes into the plan, even if it only pays creditors pennies on the dollar. Chapter 13 can be particularly useful for consumers with assets over the exemption amounts, or non-dischargeable debts.

The Chapter 13 Process
In chapter 13, you must submit a plan in which you set out a budget detailing your take-home pay and monthly living expenses. Any excess income is paid to the bankruptcy trustee who then distributes money to creditors on a pro-rata basis. The plan lasts for 36 to 60 months, unless your debts are fully repaid in a shorter period of time. At the end of the chapter 13 plan, any amounts still owing on your unsecured debts are forgiven. Chapter 13 payments can be automatically withdrawn from your bank account by the trustee if you choose.

Mortgage Problems
Another benefit of chapter 13 specifically for homeowners is back mortgage payments can be put into the chapter 13 plan and paid off over the plan period, rather than all at once. So long as you can continue to make regular post-petition mortgage payments, the bank can't foreclose on your house because you chose to put mortgage arrearages into a chapter 13 plan. In fact, chapter 13 was originally designed for this purpose, to prevent foreclosures.

CALIFORNIA BANKRUPTCY LAW FOR BUSINESSES

Overview
Bankruptcy law generally works the same for businesses as it does for individuals, with some notable exceptions. First, incorporated entities can not claim any exemptions. This means all the property an incorporated business owns is subject to administration by the bankruptcy trustee. Second, incorporated businesses can not file chapter 13, instead, they must file either chapter 7 or chapter 11. The chapter 7 process works very similarly for businesses as it does for consumers, one helpful illustration of a business bankruptcy is the shop-owner who simply throws the keys on the counter one day and walks out never to return. Of course this is just an illustration possession of the business premises must be maintained until that control is turned over to the bankruptcy trustee.

If you need help with filing bankruptcy for your business, please Contact a Lawyer who is familiar with bankruptucy laws for businesses.

Chapter 11 Bankruptcy Information
Chapter 11 works for businesses similarly to chapter 13 for individuals. One of the main differences is the business owner or president becomes the trustee in a chapter 11 called the "debtor in possession." This carries with it a plethora of responsibilities and duties to maintain the business for the benefit of creditors. Also, in chapter 11 the United States Trustee is intimately involved in the operation of the business until the case is complete. The bankruptcy court takes debtor in possession fiduciary responsibilities very seriously. Chapter 11 is a major commitment on the part of the business owner or president, and the attorney involved. The complexities of chapter 11 are beyond the scope of this website, but can be explored in a free consultation with a bankruptcy attorney.